Oracle

  • December 5, 2019
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    So now Oracle is appealing the Pentagon $10 billion JEDI contract to provide cloud computing solutions, which was awarded to Amazon. A release on PR Newswire states,

    “The Court of Federal Claims opinion in the JEDI bid protest describes the JEDI procurement as unlawful, notwithstanding dismissal of the protest solely on the legal technicality of Oracle’s purported lack of standing. Federal procurement laws specifically bar single award procurements such as JEDI absent satisfying specific, mandatory requirements, and the Court in its opinion clearly found DoD did not satisfy these requirements.”

    At the same time the DoD announced an official review of the award saying among other things

    “We are reviewing the DoD’s handing of the JEDI cloud acquisition, including the development of requirements and the request for proposal process. In addition, we are investigating whether current or former DoD officials committed misconduct relating to the JEDI acquisition, such as whether any had any conflicts of interest related to their involvement in the acquisition process.”

    Spokeswoman Dwrena Allen

    Frankly, a lot of people probably (likely, definitely) don’t care about JEDI and what it means, but if we were all small-d Democrats in this republic, we might (ought to) care. Here are some reasons.

    Advancing the technology

    Throughout the post war history of tech and its relationship with government there’s been a great symbiosis that has advanced the frontiers of technology while giving government better, faster, and cheaper solutions. Government’s investments in numerous companies and think-tanks drove research and development R&D and supported emergence of globe-leading new companies and millions of employees who pay taxes. All in all, it has been a productive relationship and a good investment.

    But now the Pentagon wants to chuck all that and go with a single provider that it hopes will continue to advance cloud computing and, ironically, it can be argued vociferously as Oracle continues to do, that the JEDI process has not selected the strongest technology for the job.

    For instance, Oracle founder and CTO, Larry Ellison, takes no small measure of glee when he presents benchmarking data at Oracle OpenWorld (coming to San Francisco in September) comparing Oracle’s technology with Amazon’s. By many measures, it’s just not that good for huge deployments though many Oracle users use Amazon products for sandboxes in their development labs because it’s less expensive. But if you’re offering $10 billion take it or leave it for what amounts to the kitchen sink, might cost suddenly move to the back burner?

    But the Pentagon’s concern about having multiple vendors in the soup for what will be its cloud computing foundation at least to the middle of this century, is also understandable. Cloud computing, heck computing in general, is still a Balkanized jumble of vendors with often uncooperative standards that prevent information sharing. It’s getting better but it is still unacceptable when you’re dealing with technology that will be used to make split-second decisions about friend and foe, war and peace.

    I get that.

    But it’s no reason for a sole source award. With history as a guide we should be encouraging a multivendor award that demands that vendors do a whole lot more to advance inter-connectability. Moreover, that’s the direction this industry is moving in anyhow, i.e. toward a big information utility much like the electric utility we all use. The JEDI award should be used to accelerate this process.

    Don’t be confused, there is no single vertically integrated electric utility from sea to shining sea. Instead there are thousands of companies and solutions that work within the same standards so that there’s an appearance of a utility and a grid. That’s what the JEDI procurement should be working towards.

    Sole source award and Oracle doesn’t have standing?

    Okay, I’m not a lawyer but you have to admit that a ruling that Oracle doesn’t have standing in the appeal seems at best contrived. This procurement is a gnarly, complex can of snakes that about 1,000 people on the planet truly understand and virtually all of them work for DoD, IBM, Microsoft, Amazon, Oracle and a few other places (China, Russia), but essentially the companies that competed for the business in the first place.

    So if Oracle doesn’t have standing, who does? Anybody? And is that any way to run a democracy? The PRNewswire piece also says that

    “The opinion also acknowledges that the procurement suffers from many significant conflicts of interest. These conflicts violate the law and undermine the public trust. As a threshold matter, we believe that the determination of no standing is wrong as a matter of law, and the very analysis in the opinion compels a determination that the procurement was unlawful on several grounds.”

    Bragging rights and picking winners

    Aside from the $10 billion (plus overages) that some lucky vendor will gain from this award, there’s the matter of bragging rights in the marketplace. It’s hard to believe the successful vendor won’t try to put some marketing muscle behind claims of superiority thanks the endorsement such an award provides as a natural consequence. That means picking winners, something that politicians raged against when the Obama administration made an investment in a solar panel maker.

    That’s why the after award litigation is so hot. Oracle has the resources and is known for being a persistent litigant when it feels wronged and, in this case, it’s hard to see how they could not challenge the award.

    This litigation could tie up and real work on the contract for years and deprive the Pentagon and the American people of advances in defense and security that they should expect from their government. It’s not too late for the Pentagon and DoD to take a step back and re-evaluate their goals.

    My two bits

    JEDI should be thrown out. It’s not a stretch to say that the better technology was not selected, at least by some important measures. Also the belief in a sole source was misguided at best. But even if you throw JEDI on the ash heap of history, you don’t have to begin again from zero. A broader requirements set based on a demand for interoperability could be put forth and several other vendors (all of them American companies) should be incorporated into the process. It’s hard to believe that Microsoft, with its expertise in system software, networking, apps, tools and databases wasn’t included. You can say similar things about IBM and HP both of whom have significant hardware, networking and Unix chops. And don’t forget IBM’s Watson. Add Oracle to the mix for their autonomous database, fault tolerant and ultra-secure hardware, apps and more.

    The trend so far, to me, suggests that there are too many Ids and egos involved in this deal and not enough logic and dispassionate decision-making. The American people deserve better as does the planet whose fragile peace depends on it.

     

     

     

     

     

     

     

    Published: 3 days ago


    Drop Tank is a small company in footprint–it started with only 22 people–but with an outsized mission to provide loyalty and discount programs to thousands of gasoline retailers. It has been decades since gas stations offered incentives to purchase their products. Last time, in the 1960s, retailers would routinely offer silverware, glassware, and china for fill ups. Alternatively, some would offer Green Stamps–collectable coupons redeemable for merchandise. That was the state of the art for loyalty programs.

    All of these arrangements were relatively easy to administer and there was no back-end data to massage. A customer made a purchase and got a reward on the spot. Those were the days! Today’s loyalty programs often capture metadata from the transaction that credits points to a customer’s account and the customer can determine how best to spend them.

    Drop Tank started out providing single-use, cents per gallon discount cards to customersin 2012. Today it offers the same fuel discounting scheme but also gift cards and combined offers for gasoline plus consumer packaged goods sold in convenience stores that also sell gas.

    Less than five years ago (2016), Drop Tank began designing a back-office system to ride herd on customer gas purchases and the points they accumulated. Any customer could join by adding a phone number which could then be used at the pump to identify the purchaser. The system has been through several iterations in its short life, each time becoming simpler and more efficient and thus better able to support an expanding mission.

    Black box

    When Drop Tank started out, it produced a small black box device that connected to the pumps capturing customer data and purchases for later upload and processing. The device was needed because 65 percent of retailers are independent and have the ability to choose their POS (point of sale) system. This resulted in integration challenges best met by hardware. But less than ten years later, the black box is gone and the latest iteration leverages the Oracle Autonomous Database which enables several important improvements for Drop Tank and its customers.

    Drop Tank’s principal partner is Marathon Oil, a vertically integrated petroleum company that leads in oil refining in the US and runs a large distribution network located primarily in the Eastern half of the US, though recent acquisitions have spread the footprint into the West.

    Although the original black box solution was good for its time, installing those boxes at more than 3,500 retail locations was time consuming and expensive, requiring a visit to each retailer.

    Tim Miller vice president of technology for Drop Tank, was a co-founder of the company and he has run IT since founding so each iteration of the system was his responsibility to develop, deploy, and maintain–all the incentive he’d need to support continuous improvement.

    Over time, Miller has been able to replace the black boxes with server-side software for all of the POS systems popular with his customers, the retailers. Importantly, the evolution of technology in the dealer network mimicked and supported the evolution of increasingly sophisticated services provided by Drop Tank to the retailer and, recently to CPG companies. Consider these milestones,

    Stage 1, 2012

    Initially, Drop Tank functioned as a promotional products company with cards and codes that dropped the price at the pump. Customers didn’t need to enroll in a program to enjoy savings, but Drop Tank had limited ability to leverage data to engage with them.

    Stage 2, 2016

    The original cents off system was built on Rackspace and was adequate for the need. But by 2016 Miller and a small team designed an improvement that would take the black boxes out of the equation letting the retailer simply connect a POS system to Drop Tank’s headquarters using Oracle Cloud Infrastructure. It made sense because it reduced the time and expense associated with deploying hardware from four hours per site to 30 minutes. Now all of the integration and conversion could be handled by software. It also appealed to retailers who wanted fewer devices behind the counter connecting to other systems and printers. So, simplification was good for all parties.

    The dealer network reacted, and Drop Tank’s new retailer signups doubled..

    Stage 3, 2018

    With its system built and in place and connected directly to the POS systems Miller and his team discovered they could gather additional point of sales data that other systems either were not capturing or, because there were so many disparate systems in use, no one could easily aggregate. This was in stark contrast to the way other retailers could capture data and provide it to CPG companies. For example, supermarkets can routinely report to CPG vendors not only what sold but what other items made up the transaction.

    Enabling business analysis with Oracle Autonomous Data Warehouse

    Drop Tank discovered that it could collect data that CPG vendors needed and also provide more information to a growing set of CPG vendors. But the company needed a data warehouse that could handle the load while enabling the company to retain its small size, now a 22 people business. So, finding the right amount of automation was critical. That’s when they turned to Oracle.

    While Drop Tank captures a great deal of data in its data warehouse, there are always times when CPG companies might want specialized information that’s not easily available as the system was set up.

    It’s a common problem. For years data warehouse users have tried to build a perfect warehouse containing every kind of data and every possible analysis, but that’s not real. So, Miller took the company in a different direction. Today he says, “Don’t try to build a data warehouse that’s perfect, instead, leverage the power of the Autonomous Database,” which he does.

    When a CPG customer makes a special request, Miller says that, thanks to the Oracle Autonomous Data Warehouse, Drop Tank can simply spin up a new database automatically in about an hour without the traditional overhead of building, tuning, and maintaining it. “Spinning up a traditional database and tuning it can take days or weeks. Within an hour I can have the database running, within 4 hours we can load data and then within another hour we can have answers. That’s as difference-maker.”

    Topping off

    Oracle technology has enabled Drop Tank to grow in several ways. Oracle PaaS and IaaS have enabled the company to run its IT in the cloud using a service-oriented architecture (SOA) that helps the company reduce overhead and save headcount. Oracle Autonomous Database enabled the company to branch into providing information services to CPG companies from its starting point as a loyalty program provider. And, Oracle automation has enabled this small company to remain small in headcount but to continue to grow its services while significantly increasing productivity.

    Published: 7 months ago


    Until recently, becoming a subscription provider has been a big and expensive task. To get into the game, a vendor needed to build a subscription business model right next to its traditional businesses, so to speak, which typically involves building an ecommerce web store and member site, organizing an online price list and catalog, and figuring out how to handle subscription business receipts as well as shipping and dealing with returns.

    There’s more too, like using analytics to understand the business and its relationship with customers. For example, businesses that send unique or curated bundles periodically, need analytics to determine the best possible recommendations to ensure customer delight and avoid costly returns.

    Early on, vendors had to do all this themselves and many resorted to piecing together multiple systems available in the market. That was hard enough when ecommerce was a new thing but today any business entering the market must do so knowing that its competition is already up to speed, so there’s little room for mistakes.

    Not surprisingly, ecommerce is commoditizing with vendors now offering most if not all of the things that vendors need to get going and to remain in the subscription business. OceanX is an interesting company in this regard. They offer a simple and easy way to take any retail business into the realm of subscriptions.

    OceanX saw high barriers to entry as an opportunity. If it could build a platform that supported direct-to-consumer retail for a scalable number of businesses it would be able to lower their costs and, importantly, reduce the risks involved for any company developing an ecommerce business.

    Making it work

    Like many startups OceanX chose Amazon Web Services (AWS) to support its vision. That was nearly three years ago and the company saw success almost immediately.

    One of OceanX’s early advantages was that as a platform it could offer integrated business processes from on screen shopping to cash. But equally important, all its platform apps capture and share customer data with other apps in the portfolio and this analysis gives partners important insights at all critical points in the customer journey—something that’s harder to do with a piecemeal approach.

    In ecommerce especially, understanding the customer journey is paramount, and having data that partners can analyze is critically important to producing a personalized customer experience. We can broadly define this as experiences that satisfy customer needs and that keeps them coming back—two critical elements of success in subscriptions.

    Getting specific

    Supporting a subscription ecommerce model is, of course, harder than this general description. For instance, there are two basic subscription models, curation and replenishment. A curated model sends a selected or curated box of goods to a subscriber each month based on information the customer initially supplies which is later augmented by purchase history. A company engaged in sending curated clothing to subscribers needs to obviously know style preferences, sizes, and colors but also what’s been recently recommended and purchased. Two pairs of hiking boots sent in rapid succession is not a winning formula, neither is offering boots too soon after an initial rejection.

    The curation model is the fastest growing part of ecommerce according to the Subscription Trade Association (SUBTA) which says that about 65 percent of subscription services use the curation model. So subscriptions to curated goods provide a great opportunity but also great challenge.

    The second model, replenishment, may be more familiar. From shaving supplies to dog food and quite a bit more, subscribers can “set it and forget it” receiving a just in time delivery each month though they still have the opportunity to change order parameters like content, frequency and quantity. Importantly, only 14 percent of subscription vendors use the replenishment model.

    But within these two models you can see the need for all the components of ecommerce including data collection for later analysis, members portals, order and change processes, and returns. OceanX provides its partners with a solution for all this that they don’t have to develop and maintain.

    At the same time, it’s important for partners to maintain control of processing so OceanX runs warehouse and distribution systems and it picks and packs goods for its clients. However, payments are credited directly to partners’ bank accounts. OceanX is paid by its clients just as any other subscription supplier would be.

    Ideal for brick and mortar?

    You’d be right if you thought that brick and mortar retailers could take good advantage of the subscription model. After all, the retailers already have a brand, customers, supply chains, and they know retail and merchandising. In many ways this is an ideal setting for an omnichannel approach. But retailers still have to deal with things like pickups and returns and such situations as buy online but pick up and return in store and OceanX’s technology extends to all of this.

    Importance of analytics

    A lot of any subscription business depends on Key Performance Indicators or KPIs, measurements that can tell a vendor how many customers come back and what percent leave for instance. High retention rates (90 percent+, depending on the industry) indicate the vendor is doing well which limits the investment needed in replacing revenue that goes away for organic reasons. Other measurements include customer lifetime value (CLV), annual recurring revenue (ARR), and much more. Each measure provides insight into the health of the business both now and in the future and each depends on having a complete view of every customer and every process. It all comes back to collecting customer data and having the right analytic tools.

    Enter Oracle

    OceanX was initially successful with hosting its business intelligence and data platform, parts of its entire system, on AWS and it still uses AWS for orders and other parts of its platform. But success handed OceanX what you might call a high-class problem. It needed more horsepower for various functions like business intelligence, reporting, and analytics. That’s why the company began searching for a cloud-based solution that could give it more performance than AWS.

    “We were faced with severe performance issues in our data loads and cube builds,” said Vijay Manickam, VP Data and Analytics. “We were left with an option to increase the CPU’s [with AWS] that would have costed us more license fees. To scale from there would have costed more. Oracle Exadata Cloud Services enabled better performance at a lower cost. We proved this with a POC [proof of concept] before we embarked on the migration. At a high level there was a 3x performance gain and about 30% reduction in TCO.”

    With the POC in place, OceanX selected Oracle to support the lion’s share of the business intelligence platform in the Oracle Cloud. It also relies on Tableau for analytics and takes advantage of Oracle data transformation engines thus enabling it to maintain a single view of the customer across two clouds.

    OceanX

    The reasons for moving to Oracle Exadata Cloud Services can best be summarized in Manickam’s words. “Our business depends on giving our clients who are sophisticated brands and retailers, complete visibility into their customers,” he said. “At the same time, we know how important it is to provide a personalized experience to customers. Both are highly dependent on having a single view of all customer data and being able to analyze it quickly and accurately.”

    Those were the twin drivers at the company’s inception and the vision for building and operating its platform. The key to success, though, was more than those two things. Success also required a platform and infrastructure that could easily expand and provide the performance needed to do all of the back-end processing that few people see but everyone misses when it’s not present. The platform also had to support the greater security needs OceanX faced as a vendor itself.

    OceanX’s journey with Oracle is still in its early stages. The company has not made a decision yet about moving its order management modules over from AWS for example. But directionally Manickam feels they’re on the right track. “We help our customers to continuously track and analyze all facets of their businesses, so we do the same with our business. We chose Oracle because of their experience in high performance systems.” So far it was a good decision.

     

    Published: 10 months ago


    I’ve been writing a forecast column every year at least since W was president. Nothing’s wrong with that, lots of people do. But I often find that my forecast is more of a wish list than a true prognostication so this time I’ll dispense with the fiction of analytical rigor and just say what I think needs to happen.

    Platforms and leaders

    First, the industry is consolidating. The big and successful companies are competing on a different plane than the smaller ones. The smaller guys are working harder than ever and some are realizing they need niches, that they’re not going to be able to cover the whole CRM landscape.

    This is mostly a good thing because it clarifies the mission and lowers the costs of being in the market. I can also mean better and more verticalized software. But there are two basic kinds of these companies—those that have credible platforms and those that don’t. Among those that do I’d list several including Oracle, Salesforce and Zoho.

    Oracle and Salesforce should not surprise but Zoho might. They’ve spent decades building a global solution and platform. There is only some overlap between the two with Salesforce attacking the really big enterprises and offering a huge ecosystem. But Zoho is a powerful solution for the small to mid-enterprise. It also has a good ecosystem. One of the big differentiators is how much ERP functionality you’re likely to need and where you plan to get it. Salesforce integrates well and has ERP partners like Financial Force. But Zoho offers good back office apps as a part of their service as well as having that ecosystem.

    Another vendor in the mix is NetSuite which has been setting sales records since Oracle bought and significantly invested in them. NetSuite’s idea of CRM is eCommerce though, so customers will self-select.

    So on the flip side, there are small-ish vendors still working on their own platforms and whose development teams are measured in the hundreds. The market leaders have thousands of developers in contrast, which is why it’s time for these vendors to find a niche and try to excel. With that comes a decision point about their platforms.

    Integration

    Next, we’ve had years of AI and social media, and even years of integration. I think it’s time for a year of integration on major pharmaceuticals. We need better networking and this needs to be led by the biggest names. A consortium including Microsoft, SAP and Adobe announced the Common Data Initiative (CDI) last year which I still think is not only too little, its major purpose is more aimed at slowing the advances of Oracle and Salesforce. Oracle’s autonomous database and enhanced security present a major challenge to other DB vendors. Salesforce is drafting behind the Oracle RDBMS on this one and has that advantage.

    CDI focuses on building a common CRM data model and that sounds good, but it has too many moving parts as in potentially every vendor in the industry. Smarter people have said the better approach to making everything talk is to facilitate the communication at the API level. I agree. No surprise, some of the vendors conspicuously left off the Microsoft, SAP, Adobe invitation list, are pursuing the API approach, like Salesforce, and I think 2019 will be a banner year for more API centric networking.

    We need that approach too, not just in CRM but throughout the tech world as we continue to build what will be a true information utility in the not too distant future.

    Taking social seriously

    Social media has deep roots in CRM—recall the year(s) of social CRM—and because it does, I think there’s subtle pressure in Silicon Valley for the likes of Facebook, Twitter, and all the rest, to clean up their acts and mature their business models and security plans.

    Recent reporting shows that virtually every social network has either been compromised or willingly gave access to private information to entities that shouldn’t have had it. You can’t do CRM if customers get worried about how their data is being used. CRM is an unwilling victim of social shenanigans and they don’t want to be seen as willing partners, so the pressure is on.

    Foolish social leaders will think they can wait out the federal government on regulation but that approach could backfire when the feds deliver a set of regulations that don’t work. Remember, many of the people who would pass this legislation are in their 70’s and have an archaic understanding of tech. Smart leaders will see this and volunteer to define what’s possible.

    My two bits

    I’m looking forward to 2019. I don’t think it will be a time of runaway growth and major innovation in CRM though I would be pleased to be proved wrong. In a consolidating world, there will be some losers too so be prepared.

    I think the year ahead will impress by showing unprecedented innovation, of people and companies doing some unexpected things that make a lot of sense. I’m looking for the second or third tier of companies to be more aggressive in the mergers and acquisition arena in a bid to become more competitive. After a lot of years in this seat, I’m still having fun and I appreciate you letting me share my views.

     

    Published: 10 months ago


    There’s a confusing dynamic happening in the software industry caused by the inexorable shift to the cloud. Even before you can get into the analysis you need to identify which cloud(s) you’re thinking about (infrastructure, apps, platform). Also, once you’ve done that you need to decide if you’re partial to technology or financial analysis. It should be no surprise that either approach alone gives only half the picture, so you really need to engage on both fronts.

    A big topic right now centers on whether vendors are growing their revenues fast enough to claim leadership positions in the cloud. If not, what happens to those not growing fast enough to satisfy the finance guys. Oracle is a case in point and the company has been subject to a lot of financial analysis that finds the company lacking. How you evaluate revenues, especially in comparison to peers helps you figure out the price of a share of stock. But it’s very hard to get to an apples-to-apples comparison.

    As one recent post on Seeking Alpha declared, “Oracle’s ability to adapt to the decline of the on-premises software business and the rise of cloud/SaaS remains in question.”  To which I say maybe because the analysis is only partly revenue related. Of equal importance is the changing revenue model—taking in incremental revenue rather than a big license fee.

    Moving to the cloud changes the business model, not just the product and too often I see financial analysts applying old financial models to new technology and business models and it doesn’t work well.

    For most companies the easiest customer to re-sell or up sell is one you’ve sold to before but migrating your installed base to the cloud is anything but easy if you sold them legacy solutions. The effort is more akin to selling for the first time. No decision which can be frustrating in any sales situation is just as prevalent in an installed base as it is in the general market even for an incumbent vendor.

    So in the horserace that some financial analysts insist on handicapping, a pure cloud vendor will usually look better than a legacy vendor moving there. But on top of all that, when your analysis is based on revenue growth you can get spurious results. Even if a legacy vendor induces an existing customer or a group of them to convert, the revenue impact is likely to be a short-term reduction because we recognize cloud revenue over time, not all at once.

    We are unarguably in a transition-state so we see a mixed industry. But if you go down the road a few years to a time when the major conversion from legacy to cloud is over, the whole industry will look more uniform and comparisons will be easier.

    But it will also be a more fragmented market than we have now. Software vendors will have many complex relationships between themselves and infrastructure vendors and it will be far from unusual for Brand A software to be running on Brand B infrastructure even though both brands might offer both software and infrastructure.

    All of this suggests to me that the real plain of competition will have to change. It will change because the vendor communities want to avoid the zero-sum rut that markets invariably head towards in a commoditization push that leaves the survivors competing for pennies when they once competed for millions.

    That’s why I see the industry morphing into a utility where a small oligopoly controls most aspects of the market, usually under some form of regulation. A utility won’t care much about infrastructure, for instance, because it will all be the same from the perspective that it adheres to standards.

    The electric utility industry is a fitting example. Electric devices are agnostic over how power is generated or whether it comes from next door or a thousand miles away though some customers might prefer greener or cheaper solutions. But vendors in the supply chain take responsibility for adhering to and maintaining standards so that the product is uniform.

    Last word

    It’s doubtful at this stage if any of the enterprise software vendors will stub a toe getting to the cloud. Each has a unique path to travel that’s based on history and legacy constraints. At this point, rather than comparing vendors in what is a very disparate market, it might be wise to look more at year-over-year comparisons and similar measures that track a vendor’s progress against the goal. Revenues and revenue growth will, of course, always be important but the handwringing that goes into quarterly analysis and that emanates primarily from looking at a still emerging market and seeing a long established one, obscures reality and benefits no one.

    Published: 1 year ago